MILAN (Reuters) -Italian borrowing costs rose sharply on Wednesday, reflecting growing market expectations of a tenth straight interest rate hike by the European Central Bank.
The Treasury placed 3.25 billion euros ($3.49 billion) of a 3-year bond due on Sep. 15, 2026 at a 3.86% gross yield, the highest since July 2012 and up from 3.71% at the previous auction two months ago.
The ECB expects euro zone inflation to remain above 3% next year, bolstering the case for a rate increase at its meeting on Thursday, a source with direct knowledge of ratesetters' discussions told Reuters on Tuesday.
The Treasury sold the maximum amount offered, 9.75 billion euros, in four BTP bonds.
It placed 4 billion euros of a new 4% coupon, 7-year BTP bond due on November 15, 2030, at a 4.21% gross yield - the highest since October - versus 3.90% at the previous auction in July for a note maturing in June 2030.
The Treasury also sold 1.5 billion euros of a 30-yr BTP note due October 1, 2053, fetching a 4.98% gross yield compared with a 4.54% yield at a previous auction in mid-June.
($1 = 0.9315 euros)